NEUTRAL STANCE:：Output continued to grow slowly last month, lending support to those favoring a neutral monetary policy, rather than Japan’s more active approach

Bloomberg

Sat, Feb 02, 2013 - Page 15

The Purchasing Managers’ Index (PMI) was 50.4 last month, compared with 50.6 in December last year, the National Bureau of Statistics and China Federation of Logistics and Purchasing said yesterday in Beijing as they more than tripled the number of companies surveyed.

Chinese officials have been hesitant to add stimulus beyond accelerated approvals for investment projects and two interest-rate cuts last year, with a measure of input prices in the government-backed gauge rising to a 17-month high.

“China — and most of the Asian countries except Japan — is switching to a more neutral policy stance,” Joy Yang, chief Greater China economist at Mirae Asset Securities (HK) Ltd in Hong Kong, said in a Bloomberg Television interview.

In the second half, “growth momentum is going to lose support from the policy side and we have to rely more on the private sector as well as the global recovery,” she said.

The reading of the government-backed PMI showed a fourth month of expansion and compared with the 51 median estimate in a Bloomberg News survey of 33 analysts.

The preliminary reading of HSBC’s gauge released on Jan. 24 was 51.9 and the median estimate from 12 analysts for yesterday’s final level was 52.

Chinese Premier Wen Jiabao (溫家寶) said in comments published this week that inflation cannot be underestimated “at any time.”

Consumer-price gains accelerated in December last year to the fastest pace since May.

The difference between the two gauges yesterday “highlights the need to adjust the official PMI for seasonal patterns,” said Louis Kuijs, chief China economist at Royal Bank of Scotland PLC in Hong Kong.

China’s statistics bureau said that the PMI for small companies fell to 46.2 last month from 48.1 in December. The gauge for medium-sized businesses dropped to 49.7 from 49.9, and the level for large enterprises increased to 51.3 from 51.1.

The federation’s PMI is now based on responses from purchasing managers at 3,000 companies in 21 industries, compared with 820 enterprises in 31 groupings previously. The HSBC survey includes executives at more than 400 businesses.

“The official PMI now could better reflect the current state of Chinese manufacturing activity,” Liu Li-Gang (劉利剛), head of Greater China economics in Hong Kong at Australia & New Zealand Banking Group Ltd, said in an e-mail.

“After all, the current recovery is still narrowly based, led by a strong pickup in investment, which in turn has spurred a rebound in China’s heavy industry,” Liu added.

Tighter constraints from resources, the environment and labor supply will challenge the economy this year, Chinese National Bureau of Statistics Commissioner Ma Jiantang (馬建堂) said on Jan. 18.

Chinese industrial companies’ profits rose in December last year for a fourth month, a statistics bureau report showed this week.

Net income increased 17.3 percent from a year earlier to 895 billion yuan (US$144 billion), after a 22.8 percent jump in November.

Earnings for the full year gained 5.3 percent, down from a 25.4 percent pace in 2011.